The lender is making an impressive comeback almost three years after devouring TARP funds and touring bankruptcy court. A tasty takeover target for a hungry bank?

Clouds still hang over many U.S. banks, which are grappling with the legacy of the 2008 financial crash and new worries stemming from Europe. But the sun is starting to shine again on CIT Group (ticker: CIT), a New York-based lender to small- and mid-sized businesses that took a quick trip through bankruptcy court in late 2009, in one of the biggest Chapter 11 filings in U.S. history.

Today CIT has a strong capital position, with a 19% Tier 1 capital ratio, well above other finance-industry peers. It is paying off...